When Trust is Too Few or Too Much

Trust is not always rational or always adaptive and profitable. Let's see when it is rational or irrational, and when it is not useful, although well grounded.

Rational Trust

In our view trust can be rational and can support rational decisions. Trust as attitude (core Trust) is epistemically rational when it is reason-based. When it is based on well motivated evidences and on good inferences, when its constitutive beliefs are well grounded (their credibility is correctly based on external and internal credible sources), when the evaluation is realistic and the esteem is justified, not mere faith.

The decision/action of trusting is rational when it is based on an epistemically rational attitude and on a sufficient degree relative to the perceived risk. If my expectation is well grounded and the degree of trust exceeds the perceived risk, my decision to trust is subjectively rational.

To trust is, indeed, irrational either when the accepted risk is too high (relative to the degree of trust) or when trust is not based on good evidences, is not well supported. Either the faith component (unwarranted expectations) or the risk acceptance (blind trust) are too high. Rational trust can be based not only on reasons and reasoning, on explicit evaluations and beliefs, but also on simple learning and experience. For example, the prediction of the event or result cannot be based on some understanding of the process or some model of it, but just based on repeated experiences and associations.

Over-Confidence and Over-Diffidence

Trust is not always good — both in cooperation and organisation. It can be dangerous both for the individual and for the organisation. In fact the consequences of over-confidence (the excess of trust) at the individual level are: reduced control actions, additional risks, non-careful and non-accurate action, distraction, delay in repair, possible partial or total failure, or additional cost for recovering. The same is true in collective activity. But, what does it mean "over-confidence," i.e., excess of trust? In our model, it means that X accepts too much risk or too much ignorance or is not accurate in his evaluations. Notice that there cannot be too much positive trust, esteem of Y. It can be not well grounded and then bad placed: the actual risk is greater than the subjective one. Positive evaluation on Y (trust in Y) can be too much only in the sense that it is more than that reasonably needed for delegating to Y. In this case, X is too prudent and has searched for too many evidences and information. Since knowledge also has costs and utility, in this case the cost of the additional knowledge about Y exceeds its utility: X already has enough evidence to delegate. Only in this case the well grounded trust in Y is "too much." But notice that we cannot call it "over-confidence."

In sum, there are three cases of "too much trust":

• More positive trust in Y than necessary for delegating. It is not true that "I trust Y too much," but is the case that I need too much security and information.

• I have more trust in Y than he deserves; part of my evaluations and expectations are faithful and unwarranted; I do not see the actual risk. This is a case of over-confidence. This is dangerous and irrational trust.

• My evaluation of Y is correct, but I'm too risk prone; I accept too much ignorance and uncertainty or I bet too much on a low probability. This is another case of over-confidence, and of dangerous and irrational trust.

Which are the consequences of over-confidence in delegation?

• Delegating to an unreliable or incompetent Y;

• Lack of control over Y (Y does not provide his service or provides bad service, etc.);

• Too "open" delegation: unchecked misunderstandings, Y's inability to plan or to choose, etc.

Which are, on the contrary, the consequences of insufficient confidence, of an excess of diffidence in delegation?

• We do not delegate and rely on good potential partners; we miss good opportunities; there is a reduction of exchanges and cooperation;

• We search and wait for too many evidences and proofs;

• We make too many controls, loosing time and resources and creating interferences and conflicts;

• We specify too much of the task/role without exploiting Y's competence, intelligence, or local information; we create too many rules and norms that interfere with a flexible and opportunistic solution.

So, some diffidence, some lack of trust, prudence and the awareness of being ignorant are obviously useful; but so is trusting. Which is the right ratio between trust and diffidence? Which is the right degree of trust?

• The right level of positive trust in Y (esteem) is when the marginal utility of the additional evidence on Y (its contribution for a rational decision) seems inferior to the cost for acquiring it (including time).

• The right degree of trust for delegating (betting) is when the risk that we accept in case of failure is inferior to the expected subjective utility in case of success (the equation — as we saw — is more complex since we have also to take into account alternative possible delegations or actions).